Aged Care Essentials | Care minutes funding changes: what they mean for your organisation

From 1 April, 2026, care minutes funding for metropolitan residential aged care homes has changed. Here is what providers need to know and what they should be doing now.

What has changed and why

The Australian Government has introduced significant changes to the way residential aged care homes in metropolitan areas are funded for the delivery of care minutes. From 1 April, 2026, funding for non-specialised homes in Modified Monash Model 1 (MM1) areas is now directly linked to how well providers meet their mandatory care minutes targets.

This article outlines what the changes involve, who is affected and how the new funding model works, as well as the key operational, financial and governance actions providers should prioritise to mitigate risk and maintain funding stability.

The changes come against a backdrop of persistently low compliance with care minutes targets. In the July to September quarter of 2024, only 45% of all homes met both their care minutes targets, with compliance even lower for MM1 homes at 43%.

This has occurred despite substantial increases in government funding for aged care and despite consistent sector feedback that workforce shortages are most acute in regional, rural and remote areas, not in metropolitan ones. The Government's intent is clear; funding increases must translate into more direct care for older people and it will no longer fund care minutes that are not being delivered.

Who is affected

The changes apply to providers of non-specialised residential aged care homes in metropolitan areas, defined as Modified Monash Model 1 (MM1) areas. Over 60% of all residential care homes are located in MM1.

The changes do not apply to:

• Homes in MM1 areas with specialised homeless funding status
• Homes operating in regional, rural and remote areas (MM2-7) 
  
  

Providers in these categories will continue to receive their current AN-ACC funding without adjustment.

Providers operating across mixed portfolios, including MM1 and MM2–7, should be particularly cautious, as funding variability and compliance expectations will now differ across services, increasing reporting and governance complexity.

How the new funding model works

Under the Australian National Aged Care Classification (AN-ACC) funding model, the Base Care Tariff (BCT) for MM1 non-specialised homes has been reduced from 0.5 National Weighted Activity Unit (NWAU) to 0.387 NWAU. The remaining 0.113 NWAU has been redirected into a new Care Minutes Supplement, which equates to $33.41 per resident per day based on the AN-ACC price of $295.64 (from 1 October 2025).

Providers do not need to apply for the supplement. Services Australia will automatically pay the relevant amount each month over the quarter.

Providers who meet 100% of both their total care minutes and RN care minutes targets will receive the full supplement of $33.41 per resident per day, meaning their overall funding remains unchanged. Those who fall short of one or both targets will receive a reduced supplement on a sliding scale.

In practical terms, this change converts a fixed component of funding into a variable revenue stream. Providers should treat this as a material financial risk exposure requiring active management, forecasting and contingency planning.

The sliding scale

The supplement is calculated based on two factors; the percentage of total care minutes delivered against the home's target and the percentage of RN care minutes delivered against the home's target. The rates payable are set out in a matrix (Table 1 in the fact sheet), with the following examples illustrating how the scale works:

• A home delivering 100% or more of both targets receives the maximum of $33.41 per resident per day
• A home delivering 97.5% to 100% of total care minutes and 92.5% to 95% of RN minutes receives $30.45 per resident per day
• A home delivering less than 85% of total care minutes, regardless of RN performance, receives $0 in supplement
  
  

When will providers see funding changes?

Funding changes will be visible from the April 2026 claim month, meaning providers will first see the impact in May 2026 when the April 2026 claim is finalised.

The supplement rate for the April to June 2026 quarter is based on care minutes performance reported in the Quarterly Financial Report (QFR) for the October to December 2025 quarter. Each subsequent quarter's supplement will be determined by the care minutes reported in the QFR for the previous quarter.

New reporting requirements: care minutes performance statement

From the 2025-26 Aged Care Financial Report (ACFR), all residential aged care providers will be required to prepare and submit a new Care Minutes Performance Statement. This statement must include information about: 

• Direct care minutes delivered
• Associated labour hours and costs
• RN coverage
• Occupied bed days 

Providers must engage a registered company auditor to complete an independent audit of the Care Minutes Performance Statement and submit the audited statement as part of the ACFR. 

What providers should do now

The funding changes have commenced, which means providers need to act now to assess their position and close any gaps:

• Review your October to December 2025 QFR data 
  This is the baseline quarter that determines your supplement rate for the April to June 2026 quarter. Understanding your performance in that period is the starting point for everything else. 
• Use the Department's online supplement estimator 
  The Department of Health, Disability and Ageing has published an online care minutes supplement estimator to help providers calculate expected funding based on their care minutes performance. Use this tool to model the financial impact on your organisation.
• Address workforce gaps 
  Data suggests that personal care worker shortages, rather than RN shortfalls, are the primary driver of non-compliance with total care minutes targets. Workforce planning, recruitment and retention strategies should be reviewed with this in mind.
• Strengthen rostering and scheduling 
  Rosters should be built around care minutes targets from the outset rather than reviewed retrospectively. Real-time monitoring of care delivery against targets will help identify and address shortfalls before the end of a quarter.
• Ensure accurate care time recording 
  Funding is based on reported care minutes and is now subject to independent audit through the Care Minutes Performance Statement. Staff must be trained to record care time accurately and consistently and systems must be in place to support this.
• Brief your board and leadership team 
  The financial implications of non-compliance are significant and ongoing. Care minutes performance should be a standing item on governance agendas, with leadership fully across the funding model and the organisation's compliance position. 

Conclusion

The link between funding and care minute delivery represents a meaningful shift in how the Government is driving accountability in residential aged care. For providers consistently meeting their targets, the changes mean business as usual. For those falling short, the financial consequences are real, recurring, and now subject to independent audit.

Beyond the funding implications, care minutes requirements exist because direct care time, particularly from registered nurses, is directly linked to better outcomes for older people.

Providers who align operational performance, workforce strategy and governance with these requirements will not only protect funding but also strengthen care quality and regulatory positioning.